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A basket of goods for a given consumer includes two goods X and Z. Consumer income is equal to $1,500 and the prices of these two goods are as follows:
Px=$25 Pz=$50
This consumer is consuming 10 units of good X. Suppose that over the course of a year, the price of good X changes by 20% and the price of good Z changes by -25%. How much income is needed to afford the same quantity of goods X and Z with the new prices? What is the rate of inflation? Is it possible for our consumer to buy the original bundle of goods with the new prices?
Steve plans to take the contract that provides him with the highest net present value. At what discount rate would he be indifferent between the two contracts.
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Private entrepreneurs are likely to make better investment decisions than central planners because
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Suppose that the production function were . Assume that A = 100,000, and that the current level of the capital stock is 10,000.
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Calculate openness as a percentage for Brazil and El Salvador. Explain how you calculated openness. Using a graph of Openness (as a percentage) versus time, explain in up to 100 words how openness has changed for these countries from 1995 to 2012. Ma..
If your bank pays 5.5 percent interest on savings deposits, what is the simple interest paid in the third year on an initial $100 deposit.
Explain how does the democratic political system lead politicians to emphasize points outside the production possibility curve.
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